Expert consultants cost UK small businesses £60 billion annually

The UK’s small and medium-sized firms spend more than £60 billion annually on consultancy services to assist with their business needs

Despite this high figure, 49% of firms said they refuse to use external consultants citing over-inflated costs, while 26% voiced concerns over the consultant’s levels of knowledge.

According to the research from Zeqr, SMEs spend more than 570 million hours on research and briefing in consultants to help with staff upskilling too.

Nearly 1.1 million businesses said they did not consider the services they received to be value for money, suggesting as much as £12.6 billion was spent on advice that didn’t have the desired outcomes.

Two in five businesses said that fixed fees were inefficient too, and listed it as the main reason for being dissatisfied with the service they received.

Just over one fifth added that the services they received did not meet their needs as the advice was deemed too complicated.

Despite only needing a limited amount of information, several SME owners said they still had to face fixed fees or ongoing contracts that are not needed after the initial enquiries.

Of the most sought-after areas for advice, accountancy topped the pile, followed by insurance, IT, payroll and pensions services, and website building.

Seeking financial advice is key for those that lack the necessary understanding as most businesses can ill-afford to make errors, especially when dealing with HMRC, banks or creditors.

A lack of digital skills was highlighted in the report as being a key issue, with awareness of website building, SEO, social media and software development all found to be lacking.

Another problem for SMEs surrounding the use of consultancy staff was the time and costs involved – the average business owner was found to spend more than £11,000 on services and spent three working weeks briefing them in on what was required.